I just received and read this article and want to make many more citizens aware of it. I am angered beyond description. Amazingly, this points to an issue over which Democrats and Republicans are siding together in their concern and criticism.
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Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money... “Either the Fed did not understand the distressed state of some of the assets that it was purchasing from banks and is only now discovering their true value, or it understood that it was buying weak assets and attempted to obscure that fact,” Senator Sherrod Brown, an Ohio Democrat and member of the Senate Banking Committee, said in an e-mail when informed about the credit quality of holdings in the Maiden Lane LLC portfolio. The committee held the April 3 hearing.... Billions of dollars in Fed loans -- some possibly involving subsidies for the biggest banks and corporations -- remain secret, and Congress is demanding more accountability from the Fed than at any time in its history. ("Fed Made Taxpayers Unwitting Junk-Bond Buyers," Bloomberg, 7/1/2010)
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I know that it's not easy reading through even these simple descriptions of the financial products involved (mortgages, derivatives, etc.). I get confused myself trying to follow it all. But the bottom line here is that even though Bernanke, Geithner, and others testified that the Fed was acquiring investment-grade debt during this bailout period, they failed to include details that the Fed, and consequently American taxpayers, is exposing itself to billions of dollars in below-investment-grade assets (ie, "junk").
The American people need to know this! Since I doubt that this is going to show up on the front page of the NY Times anytime soon, it is up to everyday folks like you and me to get this word out. So please pass this along (or at least the link to the article) to others on your lists.
Additionally, it would be beneficial to contact your Senators and Representative with information about this article and request that they demand an accounting of the Fed's actions.
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Federal Reserve Chairman Ben S. Bernanke and then-New York Fed President Timothy Geithner told senators on April 3, 2008, that the tens of billions of dollars in “assets” the government agreed to purchase in the rescue of Bear Stearns Cos. were “investment-grade.” They didn’t share everything the Fed knew about the money... “Either the Fed did not understand the distressed state of some of the assets that it was purchasing from banks and is only now discovering their true value, or it understood that it was buying weak assets and attempted to obscure that fact,” Senator Sherrod Brown, an Ohio Democrat and member of the Senate Banking Committee, said in an e-mail when informed about the credit quality of holdings in the Maiden Lane LLC portfolio. The committee held the April 3 hearing.... Billions of dollars in Fed loans -- some possibly involving subsidies for the biggest banks and corporations -- remain secret, and Congress is demanding more accountability from the Fed than at any time in its history. ("Fed Made Taxpayers Unwitting Junk-Bond Buyers," Bloomberg, 7/1/2010)
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I know that it's not easy reading through even these simple descriptions of the financial products involved (mortgages, derivatives, etc.). I get confused myself trying to follow it all. But the bottom line here is that even though Bernanke, Geithner, and others testified that the Fed was acquiring investment-grade debt during this bailout period, they failed to include details that the Fed, and consequently American taxpayers, is exposing itself to billions of dollars in below-investment-grade assets (ie, "junk").
The American people need to know this! Since I doubt that this is going to show up on the front page of the NY Times anytime soon, it is up to everyday folks like you and me to get this word out. So please pass this along (or at least the link to the article) to others on your lists.
Additionally, it would be beneficial to contact your Senators and Representative with information about this article and request that they demand an accounting of the Fed's actions.
While there can never be certainty about predicting the future, I think this contributes significantly to the reasons why America will not get through this economic storm unscathed, why we are headed into a "double dip" recession or worse, and why honest, hard-working, thrifty Americans are going to be severely punished for doing the right things all these years. I detest sounding so negative, but the odds keep stacking up in favor of some kind of catastrophic event. I'm not pretending to to know the magnitude, but it does not look as if it will be "business as normal" in America for awhile as long as these types of deceptions are going on.
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